Company Faces Liability Risk After Employee’s Sanctions Violation

A Wake-Up Call for Effective Compliance Measures

Zurich, Switzerland - A recent incident has highlighted the importance of effective compliance measures to prevent economic sanctions violations. In a shocking turn of events, a company’s employee was found to have breached Swiss economic sanctions regulations by engaging in unauthorized transactions with a sanctioned entity. This breach has left the corporation liable for potential financial penalties and reputational damage.

The Consequences of Non-Compliance

Individual Liability

• Individuals found guilty of violating economic sanctions laws can face severe penalties, including fines and imprisonment.
• In this case, the employee is likely to be held liable for the violation, which could result in severe penalties.

Corporate Liability

• Under Swiss law, a corporation can also be held liable if it fails to prevent a breach committed by one of its employees or agents.
• This means that the company may face fines and reputational damage, even if it cannot be proven that senior management was directly involved in the violation.
• The company may also face civil consequences, including the confiscation of assets acquired through the unauthorized transactions.

Regulatory Landscape

Swiss Sanctions Regime

• Switzerland’s sanctions regime is overseen by the Swiss State Secretariat for Economic Affairs (SECO), which has the power to impose fines and penalties on individuals and companies that violate sanctions laws.
• The SECO also works closely with other regulatory bodies, including FINMA, to ensure compliance with economic sanctions regulations.

Consequences of Non-Compliance

• Companies found in breach of sanctions laws may face:
  • Criminal and civil penalties
  • Reputational damage
  • Exclusion from public tenders
  • Termination or suspension of contractual agreements deemed to be in breach of sanctions regulations

Conclusion

The recent incident highlights the importance of effective compliance measures to prevent economic sanctions violations. Companies operating in Switzerland must prioritize risk management and internal controls to ensure that their employees and agents are not able to engage in unauthorized transactions with sanctioned entities.

In light of these risks, companies operating in Switzerland would do well to review their compliance programs and ensure that they are adequate to prevent economic sanctions violations. Failure to do so can have severe consequences for both individuals and corporations involved.